Edinburgh is the UK’s leading hotspot for office rental growth and its lack of office supply along with consistent demand will be the main drivers of above-average rental growth in in the next two years, according to a new report.​

The report, European Office Rental Growth Hotspots 2018, from property consultants JLL identifies 10 markets in Europe set to experience supply-led office rental growth outperformance in the next two years. ​

Amsterdam will see the greatest increase, followed by Stuttgart, Stockholm, Munich, Prague, Dublin, Edinburgh, Barcelona, Warsaw and Utrecht. Edinburgh is the UK’s top ranked city within JLL’s Supply Sensitivity Index.​

Read More

The Supply Sensitivity Index takes into account seven metrics – such as future supply and rental sensitivity - across 35 European cities over a 20 year time period. It explores the relationship between supply and net effective rental growth, complementing traditional macro-economic forecasts. ​

Within Edinburgh, high-quality space is in increasingly short supply, with total Grade A vacancy at just 1.4 per cent and annual rental growth of 3.2 per cent. ​

Read More

“While it is good news for landlords, it’s not such welcome news for occupiers, particularly Edinburgh’s booming tech sector. High rental prices also place Edinburgh at a disadvantage in comparison to other UK and European cities when competing for potential footloose requirements. ​

“The key to easing supply is, of course, to start developing more office accommodation. The City needs to find a way of encouraging more development. Part of the problem here is the loss of many second hand office buildings to alternative uses primarily hotels, residential and student development. If we can improve the provision of new build offices, we can start releasing some of the older office stock which is then protected for its existing use and available for younger growing companies to expand into.​

“It’s not all doom and gloom from the supply side. New developments such as Haymarket, one of Scotland’s biggest commercial development sites recently acquired by M&G, as well as plans by Parabola for a new ‘urban quarter’ in Edinburgh Park, will provide much needed relief to the city’s stock of new Grade A office supply. ​

“In addition, 80 George Street is undergoing a refurbishment which will see approximately 40,000 sq ft of Grade A space coming onto the market in 2019.”​